Abstract: This paper lists evidences of monetary supply and currency withdrawal in recent ten years and we find monetary supply is controlled by forex purchase and monetary sterilization. Using the monthly data from 2001 to 2012, we estimate the relationship between forex purchase and monetary supply based on the simultaneous equation systems and then detect that 63% of monetary supply by purchasing forex is sterilized by use of monetary tool. Then we compare sterilizing coefficient in different periods (2001—2006 and 2008—2012) and find the coefficient inclines with the drop of its relevance with foreign exchange assets. We conclude that the causes of effectiveness decline are the drop of passive monetary supply and the change of monetary control thinking.
Keywords: Effect of Monetary Sterilizing Policy, Monetary Sterilizing Tool, Sterilization Coefficient
source:Finance & Trade Economics ,No11,2013